British officials have admitted MI6 officers were present during the interrogation of 28 Pakistanis in Greece, despite apparent denials by Foreign Secretary Jack Straw. They insist, however, that the officers took no active part in the men’s arrest, questioning or abuse that was later alleged.

As the story of the interrogation of the Pakistanis, picked up in Greece following the 7 July London bombings, has turned into a political scandal in Athens, officials in the UK have retreated from Straw’s insistence that the allegations of British involvement were ‘fabricated’ and ‘utter nonsense’.

Instead, in a series of interviews with officials, it has been made clear to The Observer that MI6 officers were present as observers of the interrogations.

The MI6 station chief in Athens – who has been named in the Greek media but whom the British media have been ordered not to identify – and two colleagues have been recalled to London.

They are expected to face questions at a debriefing on whether they witnessed any abusive behaviour by agents of the Greek national intelligence agency, the EYP, or became aware of it. British law requires officers to report any abuse they witness and forbids MI6’s collusion in torture or abuse.

Challenged over Straw’s forceful denial of the original allegations as ‘a fabrication’, a Foreign Office spokesman said his boss meant specifically to rebut the claim that MI6 officers were actively ‘involved in the detention, interrogation and mistreatment [of the detainees], and was not saying British officials were not present’.

He added that it was standard Foreign Office practice never to confirm or deny reports about the activities of MI6 officers.

The Liberal Democrat foreign affairs spokesman Sir Menzies Campbell said: ‘It is normal practice for the [Parliamentary] Intelligence and Security Committee not to get involved in operational matters. But the seriousness of the allegations and the apparent inconsistencies make an investigation all the more significant. Britain would look very foolish if a full-scale investigation was taking place in Greece and we were not seen to be pursuing it with equal vigour.’

But as new details emerged in the Greek media this weekend, it also became clear that first reports of the Pakistanis’ ‘kidnapping and torture’ were exaggerated or untrue, with the alleged abuse largely amounting to punches or slaps by Greek intelligence officials, as well as threats.

The allegations are the focus of an in-depth inquiry, with Greece’s deputy Supreme Court Prosecutor, Dimitris Linos, promising that ‘truth will prevail’. The tangled story of what did, or did not, take place after the arrest of the Pakistanis will, however, reinforce the demands by British MPs for a full explanation.

According to the version of events that The Observer has pieced together, the men were arrested by Greek officials, not ‘kidnapped’ as was initially claimed, after intelligence potentially linking them to a phone used in the 7/7 attacks was passed to the Greek authorities by MI6. The decision to arrest them was taken by the Greeks.

Far from being hooded, as also first alleged, it has now emerged the men had their shirts pulled over their heads as they were detained. One detainee, Mohammed Munir, 34, said last week that they were kept for up to five days, and Greek agents repeatedly beat and threatened him.

‘They kept asking if I had a mobile phone. I didn’t. Then a man hit me very hard on the head and said, “You prick, we’ll take you on a trip to England. Do you know why we brought you here? Because of the bombs they put on the trains in England. So tell us, what do you know?” I told them I knew nothing.’

Jave Aslan, leader of the 30,000 Pakistani immigrants in Athens, said one detainee ‘told me he had a pistol shoved in his mouth’. Other Pakistanis, however, contradicted the claims. Navai Vatan, a newspaper publisher, said the men had not been ‘kidnapped’.